Obama Isn't Pursuing 'All of the Above' on Energy Policy

The president said his energy policy would encompass all forms of energy, but this isn't the case in practice.

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A worker steps through a maze of hoses at a remote fracking site run by Halliburton for natural-gas producer Williams in Rulison, Colo. in 2009.

Pete Sepp is executive vice president of the National Taxpayers Union.

Elected officials have left Washington for the campaign trail, leaving in their wake vital energy policy questions many of them would prefer to ignore. But try as they might, they can't avoid the contrasts they've created for the American people to ponder, and wonder if there are better ways forward.

Take, for example, the response from some lawmakers to one of the last bills to clear the House of Representatives before its adjournment—the "Stop the War on Coal Act" (H.R. 3409). The legislation's primary aims are to block the Environmental Protection Agency from implementing a backdoor "cap-and-trade" national energy tax (which would further depress coal production) and to create a more sensible cost-benefit review process for EPA's regulatory edicts. As a vote alert supporting H.R. 3409 from my organization explained:

The challenges facing the coal industry are largely the result of increasingly burdensome EPA regulations that drive up energy prices, inflicting higher costs on struggling energy producers, manufacturers, and consumers alike. … Affordable energy is the cornerstone of a solid economy, and unless Congress acts quickly to curtail the EPA's excesses, jobs across every sector will continue to be at risk.

[See a collection of political cartoons on gas prices.]

The legislation passed by a 233-175 vote, with the support of 19 Democrats, and will likely never see the light of day in the U.S. Senate. The Obama administration has also threatened a veto if H.R. 3409 ever cleared the upper chamber anyway. So what was the point of this exercise? Jaded political observers might say the purpose was to hold yet another on-the-record vote to impact lawmakers in electoral battleground states that also happen to be rich with coal. Still, coal companies are undeniably laying off workers, actions which, they say, are partially due to an administration whose stated goal is to dramatically reduce the role of coal in power generation.

Opponents of H.R. 3409 claimed that the real "war" was being waged against the EPA itself, and that the underlying reason for coal's business downturn is competition from natural gas. Yet, here is where one of those contrasts comes in: The EPA has not spared natural gas from its regulatory appetite either. Even though the federal government has supposedly left most decisions about shale gas extraction rules to states, this spring the EPA issued new regulations to limit emissions from the hydraulic fracturing, or fracking, process.

Free-market groups greeted the new rules not with alarm but healthy concern. As the Independence Institute put it, "At best, they codify existing industry practices. At worst, they might cause delays and other unintended consequences." Some states, led by Pennsylvania's Department of Environmental Protection, are less-than-enthusiastic over Washington's increased interest in asserting authority over fracking. And it's not just the EPA in the fray; as many as 10 federal agencies are taking a look at fracking practices, raising worries that regulatory overreach may be less than an arm's length away.

[See a slide show of the 10 states that use the most energy per capita.]

Not that the feds haven't been busy with other energy agendas, often to the detriment of taxpayers. Last month the Washington, D.C. Examiner noted that in the Obama administration's rush to spend money from the $862 billion stimulus bill on "green energy" projects, the government violated the law's "Buy American" provisions by approving the purchase of Chinese-manufactured solar panels for a federal building in Illinois. The contractor involved in installing the apparatus even sought clarification on the issue, and was told by the General Services Administration (of Las Vegas conference infamy) to proceed with procuring the panels from abroad.

My organization takes a back seat to no one in questioning the practicality as well as the desirability of "Buy American" strictures—especially since free trade has proven to be a boon, not a bust, to taxpayers. However, the incident is an indication of how far the administration is willing to go in pursuing its agenda.

[Read the U.S. News Debate: Is Fracking a Good Idea?]

Another sign surfaced last month when the Congressional Budget Office reported, apparently to the delight of green energy advocates, that federal government support for the development and purchase of electric vehicles, including grants, loans, and tax credits, will amount to roughly $7.5 billion between 2009 and 2019. Yet, between the lines of the CBO report are some economically surprising conclusions. CBO contends that even the current $7,500 tax credit for the purchase of a plug-in electric car falls about $4,500 short of covering the additional life-cycle operating cost the vehicle would have compared to conventional autos or more traditional hybrids. CBO also found that the overall impact of these programs may not be as large as its advocates suggest:

Increased sales of electric vehicles allow automakers to sell more low-fuel-economy vehicles and still comply with the federal standards that govern the average fuel economy of the vehicles they sell (known as CAFE standards). Consequently, the credits will result in little or no reduction in the total gasoline use and greenhouse gas emissions of the nation's vehicle fleet over the next several years. As a result, the cost per gallon or per metric ton of any such reductions will be much greater than the cost calculated on the basis of the direct effects alone.

[Read the U.S. News Debate: Should the Government Invest in Green Energy?]

Consider too the administration's penchant, long documented in this column, for taking away the widely available Section 199 domestic production activities deduction and the dual capacity credit, but only from the oil and gas industry. Such a move, masquerading most recently under the White House's tax reform plan, would take the nation's tax system even further away from the goals of simplification and equal treatment under the law.

The bottom line: President Barack Obama's actual policy remains a study in contrasts that does not live up to the balanced approach toward energy development he claims to favor. Like many elected officials' words on behalf of an "all of above" strategy, the reality that lies beneath doesn't match the rhetoric.

  • Read Daniel Simmons: Taxpayers Shouldn't Subsidize Wind Energy They Don't Want, Don't Use
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